Volkswagen's US diesel emissions fraud settlement: $15 billion, largest in US history

Xeni Jardin

2 years ago

Volkswagen AG's settlement with half a million U.S. regulators and diesel vehicle owners over polluting vehicles is valued at more than $15 billion cash, a source briefed on the matter told Reuters Monday.

If that's accurate, the settlement will be the largest ever automotive buyback offer in American history, and the most expensive auto industry scandal ever.

The historic lawsuit followed the German automaker's admission in September 2015 it lied to regulators and installed secret software that let U.S. cars emit up to 40 times legally permitted pollution levels.

The settlement is expected to be announced on Tuesday in Washington. Reports say it includes $10.03 billion to offer buybacks to owners of about 475,000 polluting vehicles and nearly $5 billion in funds to offset excess diesel emissions and boost zero emission vehicles.

A separate settlement with nearly all U.S. state attorneys general over excess diesel emissions will be announced on Tuesday and is expected to be more than $500 million and will push the total to over $15 billion, a separate source briefed on the matter said. Spokeswomen for U.S. Environmental Protection Agency and Volkswagen declined to comment.

Speaking on condition of anonymity, due to court-imposed gag rules, the original source said that owners of 2.0 liter diesel VW 2009-2015 cars will receive an average of $5,000 in compensation along with the estimated value of the vehicles as of September 2015, before the scandal erupted.

Prior owners will get half of current owners, while people who leased cars will also get compensation, said the original source.
Owners would also receive the same compensation if they choose to have the vehicles repaired, assuming U.S. regulators approve a fix at a later date.

The settlement includes $2.7 billion in funds to offset excess diesel emissions and $2 billion for green energy and zero emission vehicle efforts, the source said. The diesel offset fund could rise if VW has not fixed or bought back 85 percent of the vehicles by mid-2019, the first source said.